Analysts at investment bank UBS have claimed that the Xbox 360 is going to cost $299 when it hits the shelves late this year, according to this
The report claims that the consoles cost Microsoft $375 to buy in from their partners, so the firm will be subsidising each one to the tune of 75 bucks / smackers / notes.
Of course, once you add distribution to that price, it's going to be more like $80, we suspect.
For Microsoft to be able to buy hardware at that price is insane, and really shows the economies of scale that come into play when you're making millions of these things. Whilst the Xbox 360, with the incredible next-gen ATI Xenos graphics core and triple-core CPU, will cost $300, the same money will buy you just a X800XL discrete PC card, or thereabouts.
Microsoft suffered with the original Xbox, because whilst it's partners like Nvidia and Intel were able to cut the price of the components they made for the box, Microsoft was tied into paying the same price for them as at launch - meaning that Nvidia, for example, is currently making a hefty chunk off the price of each Xbox graphics chip that it makes. MIcrosoft's deal with IBM and ATI, for the 360, means that the company can go and find it's own manufacturing partners, so it can save money as the price of components comes down throughout the life of the console.
With the standard $/£ conversion rate that applies for these things, we'd expect the 360 to retail at £299 here in Blighty. Oh well.